DraftKings’ Deal With Caesars Might Be About More Than Market Access

Written By Steve Ruddock on February 27, 2019 - Last Updated on June 26, 2019

DraftKings has been one of the big surprises in the fledgling NJ sports betting market. And thanks to a new partnership agreement, the DraftKings Sportsbook app will likely be available in several other states.

In a press release issued on Monday afternoon, it was announced that the daily fantasy sports giant turned sportsbook inked a deal with Caesars Entertainment.

According to the release, DraftKings and Caesars have entered into a multistate partnership in which, “Caesars will offer DraftKings market access for its online gaming products, subject to the passage of applicable laws and the parties securing applicable gaming licenses. DraftKings’ market access is exclusive to Caesars across certain states in which Caesars operates casino properties.”

The press release goes on to say:

“DraftKings will promote Caesars Entertainment as its official casino resort partner in the states where the companies collaborate, and Caesars Entertainment will receive DraftKings’ equity. Caesars can also continue to offer their own branded sports betting and online casino apps in each of these jurisdictions — and will maintain their own primary access in all states according to regulation under the agreement.”

DraftKings will be more of a skin than a full partner

Based on the final sentence of the quote above (repeated below with bolding), the deal isn’t a full-fledged partnership.

“Caesars can also continue to offer their own branded sports betting and online casino apps in each of these jurisdictions – and will maintain their own primary access in all states according to regulation under the agreement.”

What that means is DraftKings will have market access to launch an online sportsbook through Caesars’ casino, but only in states where multiple branded skins are permitted, or if Caesars decides to let DraftKings operate as the primary forward-facing brand in a market.

Basically, DraftKings will act as a secondary brand and an online skin of Caesars. Caesars Sportsbook and its sports betting supplier, Scientific Games, will likely receive top billing.

That means DraftKings won’t be able to access a state like Pennsylvania (which limits licensees to a single sports betting brand) through Caesars’ license.

How Kambi, DraftKings are taking over sports betting

The press release doesn’t mention DraftKings’ platform partner Kambi, but it’s a safe bet that DraftKings will be taking Kambi along whenever it ventures into a new state via Caesars.

Here’s why:

  • DraftKings put a lot of time and resources into building the front-end of its Kambi-powered sportsbook. To my knowledge, Kambi is the only US sportsbook supplier that allows that level of front-end customization.
  • The DraftKings mobile sportsbook app has received rave reviews and is incredibly popular with New Jersey sports bettors — it’s the top online sports betting app in the market.

Along the same lines, the press release announcing the Kambi-DraftKings partnership contained a forward-looking statement that intimates Kambi will power DraftKings’ sports betting apps in the states that Caesars grants access to:

“The deal also includes terms for the partnership to expand when commercially agreeable regulatory frameworks are implemented in the US.”

Sorry Scientific Games, Caesars is just not that into you

Of course, having two sportsbooks housed under the same roof could cause friction between Caesars and Scientific Games.

As Chris Grove noted in the latest Grove Report:

“The big downside risk from this deal sits with SG Digital. Caesars has now walked a competing platform right through the door. There are probably even a few worlds where Caesars takes the DK frontend + Kambi backend package. An additional wrinkle: DK is understood to be working on its own end-to-end solution.”

There are grumblings that Caesars is growing increasingly dissatisfied with its current sportsbook supplier, Scientific Games. The end product has been underwhelming, even after going through a series of enhancements of late.

If Caesars is reconsidering its sportsbook supplier, this could be a trial run for Kambi. Or, it could simply be an attempt by Caesars to light a fire under Scientific Games.

If the Kambi-powered DraftKings outperforms the Scientific Games-powered Caesars books that could be the coup de grâce for the Caesars-Scientific Games relationship.

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Steve Ruddock

Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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